WHAT DO YOU KNOW ABOUT INSURANCE?

 

Insurance is simply an agreement by which an insurance company undertakes to provide guarantee of compensation for specified loss, damage, illness and even death in return for payment of a specified insurance premium. An insurance premium is the payment or instalment you agree to pay a company offering the insurance in order to get the insurance. Insurance basically provides protection against unplanned circumstances like loss. It ensures financial security for you and your family should unfortunate situations take place. In simpler terms, an insurance acts a safety net for you and your family to bounce back on with ease.

Importance of buying an insurance policy.

  • An insurance ensures your family’s financial stability
  • It protects your emotional and mental health by bringing peace of mind
  • It reduces the amount of stress you will have during difficult times
  • It secures your future goals
  • It is an effective risk management
  • It encourages a healthy habit of saving
  • It increases one’s credit score
  • It helps manage cashflow uncertainty
  • It helps minimise financial losses
  • It provides you and the society with capital which are invested in productive channels.

Types of insurances.

There are quite a number of insurance policies you can get; there are two main types of insurances; life insurance and the rest fall under general insurance.

  1. Life insurance

This is an insurance policy whereby an insurance company pays out a sum of money either on the death of the insured person or after a set period. Getting a life insurance is worth it not only for you and your peace of mind, but also for your family who rely on you financially. Under life insurance you will find covers like; personal life insurance, group life insurance, pension, annuities and funeral cover insurance.

Under personal life insurance you will find;

  • Term life insurance- this is a policy that will provide coverage for a certain period of time (10, 15,20,30 years) agreed by the insurance company and the insured. This policy is actually an affordable option which lets you reach your financial goals.
  • Permanent/ whole life insurance- this is a policy that provides life long coverage making it more expensive.
  • Endowment policy- which is a life insurance contract that is designed to pay a lump sum of money after a specific term or insurance period. All bonuses and savings will be included.
  • Funeral insurance cover- this cover is meant to cater for the funeral expenses of the insured or a loved one in the case of their demise.

 

  1. General/ Non-life insurance.

This is a policy that offers financial compensation on any other loss, that is not death. This policy only offers compensation due to liabilities related to your property, health, education etc.

  1. Health insurance

This is an insurance coverage that typically pays for the medical expenses incurred by the insured. This also includes surgical and prescription drug expenses. In case of unexpected health problems, a health insurance will definitely come to your rescue.

  1. Education insurance

Just as Nelson Mandela said, ‘education is the most powerful weapon which you can use to change the world.’ An education insurance policy helps to prepare for your child/children’s education from primary to tertiary institutions. Your child’s education insurance policy will help relieve you from stress. Surely it is good to know that your children’s tuition will be taken of whether you are there or not.

  1. Domestic package insurance

This insurance policy ensures the home. It offers coverage to the building, household items as well as domestic workers against injury or in the worst-case death in the course of employment. This policy also protects homeowners against lawsuits for property damage or injury caused to other people.

  1. Property insurance

This is actually a series of insurance policies that offer either property protection or liability coverage. This insurance policy provides protection against risks like some weather damage, fire, theft and vandalism. There are two types of property insurance policies namely; open perils/all-risk policies which covers a wide range of incidents except those noted in the policy, named perils/peril-specified policies which covers only those listed in the policy.

  1. Travel insurance

This policy compensates you for any financial liabilities like the money you lose from non-refundable deposits and payments incurred out of emergencies during your travel abroad or within your country. These emergencies can range from medical problems, baggage loss, delayed flights, loss of passport among others. Types of travel insurance include; single trip/short stay travel insurance is a policy to cover for a single specific holiday, annual multi-trip travel insurance covers you for several trips you take annually, long stay single trip travel insurance which covers you for a period up to 18 months. This policy is best suited for someone taking a long journey abroad.

Other general insurance types are;

Products liability insurance, Public liability insurance, Work injury benefits act (WBA) insurance, Professional indemnity insurance, Personal and group accident insurance, Employers’ liability (EL) insurance, Business interruption insurance, Money insurance, Fidelity guarantee insurance, and Goods in transit (GIT) insurance among others.

Insurance companies’ recommendations.

Non-life insurance companies

  • Jubilee Insurance
  • UAP Insurance
  • APA Insurance
  • CIC General
  • ICEA Lion General
  • Britam
  • Sanlam
  • Madison
  • Old Mutual